Security Deposit and Renters Insurance: Understanding the Differences and Protecting Your Interests

A security deposit is an amount of money that a tenant is required to pay to a landlord for the landlord to pay for any repairs that must be made after the tenant moves out. Renters insurance is a type of insurance policy that a tenant can purchase to protect their personal property and to cover their liability in case of accidents or injuries that occur in their rental unit.

Here are a few tips to help ensure that you keep damage to a minimum and get your security deposit back.  (Note that this advice is given from the perspective of a real estate professional.  This website does not offer legal advice.)

1. Document the condition of the unit before you move in. Take note of anything that is damaged, no matter how minor, and even take photos. Both you and your landlord should keep a copy of your checklist. That way, when it is time to move out, you will have evidence of any damage that you did not cause.
2. Know your lease. Most states allow landlords to use security deposits to cover unpaid rent or utilities, repairs not attributable to normal wear and tear, and cleaning to bring the premises back to the condition it was in when you moved in. Be sure that you know what you are expected to do before you move out.
3. Clean up before you leave. You definitely want to leave your unit in the best possible condition when you move out. You might even consider bringing in professional cleaners to make the unit appear spic and span.
4. Know your rights as a renter. Your landlord is required to notify you in writing of the charges to your security deposit. If the landlord cannot provide this documentation, you are entitled to receive your security deposit back; remember, it is your money and your landlord can only keep it for a valid, documented purpose.
5. Ask to be present when your landlord does the final walk-through. You can offer to immediately remedy any additional problems that he or she finds without forfeiting your security deposit.
6. Make sure to give your landlord your new address! He or she will need to know where to send your money. In most states, landlords have 14 days to return your security deposit.

Note that security deposit laws in NYS are a bit different for rent regulated units.  

Renter's Insurance
The security deposit is necessary for landlords to have a financial cushion to cover any damages or unpaid rent that the tenant may leave behind when vacating the unit. Renters insurance, on the other hand, is necessary for tenants to protect their personal property and assets in case of any unforeseen events that may occur while they live in the unit. So, while it's important to take steps to protect your security deposit, don't forget to also consider purchasing renters insurance to protect yourself from any potential losses.

Note that in New York, there are laws in place that limit the amount of security deposit that a landlord can collect. At the beginning of their tenancy, all tenants can be required to give their landlord a security deposit, but it is limited to no more than one month’s rent. The one-month limit means that a landlord cannot ask for last month’s rent and a security deposit. However, if the lease is renewed at a greater amount or the rent is increased during the term of the lease, the landlord is permitted to collect additional money from the tenant to bring the security deposit up to the new monthly rent. Landlords, regardless of the number of units in the building, must treat the deposits as trust funds belonging to their tenants and they may not co-mingle deposits with their own money, furthermore, the money must be returned within 14 days of the tenant moving out of a non-rent controlled apartment. 

In summary, security deposit and renters insurance are two essential aspects for tenants to consider when renting a unit. While security deposit is necessary for landlords to have a financial cushion in case of damages or unpaid rent, renters insurance is necessary for tenants to protect their personal property and assets in case of any unforeseen events. Tenants should take steps to protect their security deposit by documenting the condition of the unit, understanding their lease, cleaning up before they move out and being aware of their rights as a renter. Additionally, tenants should also consider using renter's insurance to protect their own personal property.

Is there any way to get around paying the Security Deposit?